ASSESSING THE IMPACT OF AfCFTA ON THE EAST AFRICAN COMMUNITY (EAC) ECONOMY NDAYAKIRE LANDRY = 아프리카 대륙자유무역지대(AfCFTA)가 동아프리카 공동체(EAC) 경제에 미치는 영향 평가

다국어 초록 (Multilingual Abstract)

This study quantitatively examines the macroeconomic implications of the African Continental Free Trade Area (AfCFTA) for the East African Community (EAC) using a Computable General Equilibrium (CGE) model calibrated to the Global Trade Analysis Project (GTAP Version 7) framework (Corong et al., 2017). A series of comparative-static simulations covering the period 2017–2034 evaluates the effects of complete intra-African tariff elimination and progressive reductions in Non-Tariff Measures (NTMs), modeled as improvements in trade efficiency consistent with UNECA (2019) and Burfisher (2021). The baseline scenario reflects projection from 2017 to 2034, while the counterfactual scenarios incorporate AfCFTA implementation and reductions of 1%, 2.5%, and 5% in NTMs. The results reveal that AfCFTA’s full trade liberalization produces a modest but positive increase in EAC real GDP of 0.17%. Larger gains emerge under NTM reforms: a 1% improvement in trade efficiency raises EAC GDP by 0.24%, a 2.5% reduction increases it by 0.49%, and a 5% reduction generates a 0.80% gain. When tariff elimination and a 5% NTM reduction are combined—representing full implementation of AfCFTA’s trade facilitation and liberalization pillars—EAC real GDP is projected to grow by 0.92% by 2034. While other African regions also experience positive gains, the EAC consistently records the highest proportional increase, confirming that regions with higher initial trade costs benefit most from reductions in NTMs and improvements in trade efficiency. The study also underscores the importance of technological upgrading, automation, artificial intelligence (AI), e-commerce adoption, and modern logistics systems in supporting AfCFTA outcomes. Digital customs, interoperable payment platforms, and improved transport infrastructure enhance trade efficiency and amplify the gains identified in the CGE simulations. At the same time, global economic uncertainties— such as tariff wars, decoupling, de-risking strategies, and shifting geopolitical alignments including the expansion of the BRICS bloc—reinforce the need for Africa to strengthen intra- continental markets and build resilience through deeper regional integration. Although the CGE model provides strong evidence of AfCFTA’s potential, its static nature limits the analysis of long-term dynamic effects related to investment, technology adoption, and structural transformation. Future research should therefore employ recursive dynamic and incorporate digital trade, climate, governance, and resilience variables for more comprehensive assessments. Overall, the study concludes that deep integration—combining tariff removal, NTM reduction, and technological modernization—offers the most effective pathway for accelerating economic development in the EAC and across Africa. Keywords: AfCFTA; EAC; Computable General Equilibrium (CGE); trade efficiency; non- tariff measures (NTMs); GDP; regional integration; Africa 초록 (Abstract)

목차 (Table of Contents)

• Chapter I: Introduction 1
• I.1 Background of the study 1
• I.2 Research objectives 3
• I.3 Research questions 3
• I.4 Research hypotheses 4
• 1.5 Research structure 4
• Chapter II: An Overview of AfCFTA and the EAC Region 6
• II.1.1 Introduction to the AfCFTA 6
• II.1.2 Objectives of the AfCFTA 7
• II.1.3 Key Features and Mechanisms 8
• II.1.3.1 Institutional Architecture 8
• II.1.3.2 Protocols and Pillars 9
• II.1.3.3 Tariff Liberalization Mechanism 9
• II.1.3.4 Rules of Origin and Trade Facilitation 10
• II.1.3.5 Dispute Settlement and Policy Space 10
• II.1.4 Current Status and Implementation Progress 10
• II.1.4.1 Ratification and Participation 10
• II.1.4.2 Implementation Milestones 11
• II.1.4.3 Macroeconomic and Welfare Implications 11
• II.1.4.4 Ongoing Challenges 12
• II.1.5 Relationship Between AfCFTA and the East African Community (EAC) 12
• II.1.5.1 Opportunities for the EAC Region 12
• II.1.5.2 Challenges Faced by EAC Member States 14
• II.1.5.3 Potential Economic, Social, and Political Impacts 15
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• II.2.1 Introduction to the EAC 16
• II.2.2 Objectives of the EAC 19
• II.2.2.1 Economic Objectives 19
• II.2.2.2 Social and Human Development Objectives 20
• II.2.2.3 Political and Security Objectives 20
• II.2.2.4 Environmental and Sustainable Development Objectives 21
• II.2.3 Key Features and Mechanisms 21
• II.2.3.1 The Customs Union 21
• II.2.3.3 The Monetary Union 23
• II.2.3.4 The Political Federation 23
• II.2.3.5 The Common External Tariff (CET) Structure 24
• II.2.4 Current Status and Implementation Progress 25
• II.2.4.1 Institutional and Legal Milestones 25
• II.2.4.2 Economic and Trade Performance 26
• a) Trade Trends 26
• b) External Trade and Investment 27
• II.2.4.3 Implementation Challenges 28
• a) Non-Tariff Measures (NTMs) 28
• c) Institutional and Legal Divergence 28
• d) Infrastructure Bottlenecks 29
• e) Political Heterogeneity 29
• II.2.5 Potential Economic, Social, and Political Impacts 30
• II.2.5.1 Economic Impacts 30
• II.2.5.2 Social Impacts 30
• II.2.5.3 Political Impacts 31
• Chapter III: Literature Review 32
• III.1 Review of Theoretical Foundations 32
• III.2 The Standard CGE Model 33
• III.3.1 Review of General Empirical Evidence 34
• III.3.2 Limitations of Computable General Equilibrium (CGE) Models 35
• III.4 Studies Showing That GDP Benefits from AfCFTA Vary with the Depth of
• NTM Removal 36
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• III.5 Studies on Regional Integration and Trade Policy Impacts 36
• III.6 Comparative Perspectives: Empirical Validation and Lessons from Other
• Regional Trade Agreements 37
• Chapter IV: Methodology and Data 39
• IV.1 Introduction 39
• IV.2.2 Model Structure Overview 40
• IV.2.3 Behavioral Equations and Functional Forms. 41
• IV.2.4 Model Implementation and Solution Method 42
• IV.3 Data Description 43
• IV.3.1 Overview of Data Sources 43
• IV.3.2 Regional Aggregation 43
• IV.3.3 Sector Aggregation 44
• IV.3.4 Macroeconomic Variables 45
• IV.3.5 Scenario Design 45
• IV.4 Analytical Method 46
• IV.4.1 Calibration 46
• IV.4.2 Shock Specification 46
• IV.4.3 Model Closure 47
• IV.4.4 Solution Procedure 48
• IV.4.5 Justification of NTM Shock Magnitudes (1%, 2.5%, and 5%) 48
• CHAPTER V – EMPIRICAL RESULTS 49
• V.1 Introduction 49
• V.2 Scenario Description 50
• V.2.1 Baseline 1 (Base1): Exogenous GDP Baseline (2017–2034) 50
• V.2.2 Baseline 2 (Base2): Endogenous QGDP Baseline (2017–2034) 51
• V.2.3 Why Base2 Is Required for the AfCFTA Policy Simulations 51
• V.2.4 Baseline (No AfCFTA): Business-as-Usual in 2034 52
• V.3 Policy Scenarios 54
• V.3.1 Policy Scenario 1 – AfCFTA Implemented: Intra-African Tariff Elimination
• . 54
• V.3.2 Policy Scenario 2 – AfCFTA Implemented with 1% NTM Reduction (Trade-
• Efficiency Shock) 55
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• V.3.3 Policy Scenario 3 – AfCFTA Implemented with 2.5% NTM Reduction 57
• V.3.4 Policy Scenario 4 – AfCFTA Implemented with 5% NTM Reduction 58
• V.3.5 Summary of EAC Real GDP by Scenario 59
• V.4 Comparative Analysis of Scenario Outcomes 60
• V.4.1 General Patterns 60
• V.4.2 The EAC in Relation to Other Regions 60
• V.4.3 Interpretation of the Magnitude of Gains 61
• V.5 Interpretation and Policy Implications 62
• V.5.1 The Central Role of Trade Facilitation 62
• V.5.2 Complementarity with Technological and Institutional Reforms 62
• V.5.3 Broader Regional and Global Context 63
• V.6 Synthesis 64
• CHAPTER VI — CONCLUSION, RECOMMENDATIONS, AND LIMITATIONS 65
• VI.1 Conclusion 65
• VI.1.1 Structural Transformation Through Integration 66
• VI.1.2 Technological Advancements, Automation, and Digitalization 66
• VI.1.3 Geopolitical Trends: Tariff Wars, Decoupling, and BRICS Influence 67
• VI.1.4 Infrastructure as the Backbone of Trade Efficiency 68
• VI.2 Recommendations for Future Studies 68
• VI.2.1 Extending CGE Methodologies 68
• VI.2.2 Incorporating Technological and Digital Trade Variables 68
• VI.2.3 Climate, Energy, and Resilience Dimensions 69
• VI.2.4 Political Economy and Governance Considerations 69
• VI.2.5 Empirical Data and Microeconomic Validation 69
• VI.3 Limitations of the Model 69
• VI.4 Final Reflections 70
• References 72
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